Key points:
- Joules Group reveals weaker than expected revenue in January
- Joules Group shares fall 40%
- The company said omicron and supply chain issues impacted its business
- The Best Clothing Stocks to Buy
Shares of British apparel firm Joules Group (LON: JOUL) plunged more than 40% Tuesday after the company released a trading report revealing weaker than expected revenue and supply chain issues.
The company told investors that its financial results for the 6 months that ended November 28 were in line with previous guidance, with revenues of £127.9 million.
However, revenue for the 9 weeks to January 30, while up against the past two years, is behind board expectations with the omicron variant impacting footfall.
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In addition, the company is also feeling the impact of global supply chain issues with delays to new stock arrivals impacting wholesale revenue and resulting in customer cancellations.
Furthermore, there has been a continued impact on gross margin of increases in freight, duties and distribution costs and continued operational disruption, lower productivity, and higher than expected costs within the company's third-party operated Distribution Centre. The distribution centre costs for December and January were around £1.2m above expectations, more than double compared to the prior year.
Joules added that it has taken several steps to reduce costs and simplify the business, including cost restraints in marketing, head office and capital expenditure, liquidating slow-moving stock via outlets, exiting certain UK and EU stockist arrangements, introducing minimum order value requirements in the US, and cancelling unprofitable orders.
The company expects trading over the rest of the year to recover in line with previous expectations.
